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Peak Oil and Climate Change
Two sides of the same coin?
David Knight
Winchester Action on Climate
Change
&
Foundation for the economics of
sustainability
Oil discoveries in the US peaked in 1930
The US lower 48 states
- then 40 years later production peaked
Adapted from Collin Campbell, University of Clausthal Conference, Dec 2000
Peak of global discovery
Giants contain ≥500 million barrels of
ultimate recoverable oil
global oil annual
discovery peaked
in the early 60’s
production has now plateauedWe are using it 4x faster than we are
discovering it!
Peak Oil becomes a problem for the economy when demand for oil exceeds supply
Oil producing countries past
peak in 2006
Oil production has already peaked in many countries and the
descent in many of these has been faster than the ascent
≥ $85 from
Nov 2010 to
present
Brent crude prices rose sharply in the run up to the 2008 triggering or contributing to
the “Credit Crunch”. Oil prices recovered after the recession and have remained high to
date June 29 2012 despite a slow down in the world economy and triggering the current
global economic slow down.
Production practically flat-lines despite huge increases in oil prices
Source: US FED data http://jerrykhachoyan.com/you-cant-blame-the-fed-for-rising-gold-oil-prices/
Up to end of 2004 modest price rises produced sharp increases in production. Thereafter
large price increases produced only a small increase indicating production now limited by
depletion and a supply ceiling a little way above
Production average of EIA, IEA and OPEC estimates.
Source http://4.bp.blogspot.com/_D9JNTtRKgs/TSRxK38F_kI/AAAAAAAABeg/0ey_YhJTQW8/s400/Screen+shot+2011-0105+at+8.21.38+AM.png and many other places on the web.
[i] International Energy Agency "World Energy Outlook 2010. Executive Summary" http://www.iea.org/Textbase/npsum/weo2010sum.pdf
FED contracts money supply to
control high inflation after two
previous recessions
In the US, rapid increase in crude oil prices has been followed by a recession in 7 out of 8
cases.In several cases rapid declines in oil price in recessions result from falling demand for
oil. Hamilton takes it back further and says 10 out of 11.The US economy is very vulnerable to
inflation adjusted oil prices over $80 .
Future oil prices?
A summary collected by Antony Froggatt in Summer 2010
250

•
Growth in demand and
slowing production post
peak result in ‘price
spikes’ which trigger
recession
Recession reduces
demand and prices fall
resulting.
200

150
‘yo-yoing’ oil prices
15
Second Outline
Deutsche Bank
Level

100
50
EIA 2009 reference (2007 USD)
Third Outline
IEA IEO 2009 reference (2007
Level
USD)
(high)
FourthOPEC
Outline
Level OPEC (low)
2030
2025
2020
 Fifth
Outline
Source: Chatham House
Level

0
•
Click to edit the outline
Barclays Capital
text format
Paul Stevens, Chatham House
USD per barrel
•
Bank of America/Merrill Lynch
(range)
2010
2015
“We’re in the midst of a once-in-a-lifetime
set of economic conditions. [This] is not
[temporary] recession. Rather, the economy is
resetting to a lower level of business and
consumer spending ...”
Steven Ballmer
Chairman, Microsoft Corp.
Robert Hirsch was the lead author of a US Department of Energy
report on peak oil in 2005. Hirsch was told never to talk about the
report. This is what he has said recently:
“…if you spend some time looking at peak oil, if you’re
a reasonably intelligent person, you see that
catastrophic things are going to happen to the world.
We’re talking about major damage, major change in
our civilization. Chaos, economic disaster, wars, all
kinds of things …really bad things.“
Richard C. Duncan The Olduvai Theory: Sliding
Towards a Post-Industrial Stone Age
What needs to be done by governments to mitigate PO and CC?
Legislation and fiscal policy to:
•
•
Stop fossil fuel subsidies
Introduce Cap&Share to cap fossil fuel use and share some of the scarcity rent with the
general population
•
discourage the second dash for gas
•
decarbonise electricity production
•
Pursue growth of the green sector by stimulating investment in renewables & energy
efficiency / conservation
•
reduce material use in construction, manufacture , packing etc.
•
Redistribute wealth to mitigate against social unrest.
•
Set tighter carbon budgets.
•
Require LA’s to set and publish GHG emission budgets and descent plans and report on
compliance with these.
•
Tackle non CO2 GHG emissions.
•
Protect and improve carbon sinks (woodland and pasture etc.)
•
Facilitate transition to a steady state economy operating within ecological limits.
What can we do?
•
•
•
•
Raise awareness
Act together
Work for change locally and nationally
Walk the talk
Final summary
•
•
In the runaway climate change scenario,
peak oil and economic decline is delayed
by burning substantially all oil , gas and
coal reserves without CCS, global mean
temp could increase by as much as 15°C.
The likely consequences are horrendous
The PO catastrophe scenario could limit
climate change by precipitating chaotic
Thank you for asking me and thank you for
listening